Profits Increase By 18% At Utc

Cost-cutting Being Planned To Meet Goals

Despite United Technologies Corp.'s heavy investment in Asia and the strong U.S. dollar, profits rose 18 percent in the quarter ending June 30, the Hartford-based conglomerate said Wednesday.

Chairman George David said he's comfortable with Wall Street's estimates for earnings per share this year, and he expects an increase of 15 percent next year.

Meeting those goals in the face of Asia's financial crisis is taking some cost-cutting -- including layoffs -- at UTC divisions, which employ about 29,000 people in Connecticut.

Pratt & Whitney, which assembles jet engines in Middletown, has said deferral of deliveries to Asian carriers might require job cuts. Otis Elevator Co. and Carrier Corp., both based in Farmington, are restructuring.

And Hamilton Standard, which has headquarters in Windsor Locks, recently closed a plant in Rock Hill, S.C., and announced plans to eliminate 165 Connecticut jobs.

Pratt spokesman Gary Minor said Wednesday it's still to early to say when or how many jobs might be cut at that company.

``It's fair to assume that the deferral of engines will impact us. The magnitude, we're assessing,'' he said.

Minor said Pratt is still talking with the Boeing Co. about delivery schedules. Korean Air and Singapore Airlines earlier this week added their names to the list of carriers asking for delays.

David FitzPatrick, UTC's chief financial officer, told analysts during a conference call Wednesday that Pratt expects to take cost-cutting actions later this year, but didn't elaborate.

Union leaders at Pratt were out of town and couldn't be reached for comment.

Analysts have expected UTC to take a charge in the second half of the year to cover a restructuring or layoffs at the jet-engine company.

UTC took a similar charge during the second quarter at Hamilton Standard. The amount was not disclosed, but UTC executives told analysts it was small.

Corporate spokesman Peter Murphy said it was too early to say if there will be a charge for Pratt. Minor said it would depend on the extent of any restructuring that was required.

Pratt and other UTC divisions have marketed their products heavily in Asia; the corporation anticipates 16 percent of its sales this year will be in that region.

UTC reiterated Wednesday that the Asian financial crisis will not affect the company's financial performance -- and to look at the second-quarter performance, it hasn't.

Earnings per diluted share were $1.44, beating Wall Street's expectations by 6 cents and driving the stock up nearly nearly $5 during trading Wednesday. It closed at $96.31, up $2.06.

For the same quarter last year, earnings were $1.19 a share. According to Nelson Information, analysts expect UTC to earn $4.88 a share this year. First Call places the estimate at $4.91 a share.

Profits were $360 million for the quarter, compared with $304 million for the same period in 1997. Revenues were $6.7 billion, up 3 percent. Pratt, Carrier and UT Automotive had double-digit increases in operating profit for the quarter.

``In terms of execution, it was exceptional,'' said Prudential Securities analyst Nicholas P. Heymann. He said UTC executives, striving to improve margins against archrival General Electric Co., ``have not lost their Midas touch.''

But he added that UTC faces several crucial issues in the next couple years: building its businesses by expanding services, handling the fallout from Asia, and coping with the retirement of older Pratt-powered aircraft, which cuts the company's lucrative spare-parts sales.

In addition, Pratt is under pressure to find homes for two new engines it is developing.

In a few years, Otis and Carrier will have to carry UTC's financial ball if Pratt's profits decline, Heymann said.